Brussels cannot afford to let the City sink

Iain Martin in TheTimes has argued the following:

Petty conflicts over who will be Europe’s financial top dog ignore the extent to which all nations rely on the Square Mile.

Considering how derided Britain’s institutions often are, it is encouraging that the civil service did such a great job last year negotiating a deal with Brussels over phase one of Brexit.

Now another pillar of the establishment, the Bank of England, has provided further grounds for optimism as we move to the second phase of EU talks. It said yesterday that it will allow banks from EU countries to operate in the UK after Brexit just as they do now. They will not have to change their status or find billions of pounds in extra capital. The upbeat message is that London will remain open for business.

The Bank’s positive approach contrasted with the aggressive stance taken by Michel Barnier, the EU’s chief negotiator. He insisted that Britain will have to accept the EU’s rules on banking and insurance as part of a trade deal — or else. This apparently dry row about bank regulation reveals the extent to which Barnier is blustering and that Britain’s hand in the next round of talks is stronger than we think.

The Bank of England was never going to set up barriers for EU banks that need a London base after Brexit, but by making it clear now, Britain looks constructive while the EU’s leading players squabble over how to treat the City.

Read more here.